Krugman’s “Modest Injections”

Reader Peg Kaplan did a nice dissection of Paul Krugman’s latest rant on Social Security on her website, What If? It’s worth a look.
I’d add a few more comments. Krugman’s column, titled “Social Security Scares,” is devoted to the proposition that there are no fundamental problems with Social Security. Krugman argues that all those who express concern about the solvency of the program, or try to reform it, are “right wing…ideologues…itching for an excuse to dismantle the system.” The core of Krugman’s argument is that Medicare is in deep trouble, but Social Security is fine:

The annual report of the Social Security system’s trustees reveals a system in pretty good financial shape. In fact, it would take only modest injections of money to maintain that system’s current benefit levels for at least the next 75 years.
The biggest risk now facing Social Security is political. Will those who hate the system use scare tactics and fuzzy math to bring it down?

Like almost everything Krugman writes, his characterization of the Trustees’ 2003 report, which can be read in its entirety here, is false. The Trustees hardly give Social Security a clean bill of health:

Between about 2010 and 2030, OASDI costs will increase rapidly due to the retirement of the large baby-boom generation, and annual costs will exceed tax income starting in 2018. The OASDI annual cost rate is projected to increase from 10.89 percent of taxable payroll in 2003 to 19.92 percent in 2077….Separately, the DI fund is projected to be exhausted in 2028 and the OASI fund in 2044.

Most astonishing, however, is Krugman’s claim that the Trustees say that “it would take only modest injections of money to maintain that system’s current benefit levels for at least the next 75 years.” In fact, what the Trustees’ report says is: “For the trust funds to remain solvent throughout the 75-year projection period,…a transfer of $3.5 trillion in general revenue (in net present value) could be made.”
So next time Krugman wails about our “enormous,” “gigantic,” “scandalous” deficits, bear in mind that he considers $3.5 trillion to be a “modest injection of money”–as long as it’s a tax increase.